How Most Credit Card Cash Back Programs Work
Before we dive into the specifics of each card, let’s take a moment to examine how cash back credit cards work. If you’re sick and tired of paying your credit card bill and would like to see some return on your spending, there’s no better way to go.
Although cash back cards represent just one class of reward cards offered by credit card companies, they remain among the most popular. After all, who doesn’t like to get paid back in cash rewards?
How do they work? When you use your credit card for an eligible purchase, the issuer pays you a percentage of your purchase price back at the end of the billing cycle or statement period.
What are eligible purchases? These are pre-determined by the card issuer.
That said, depending on the card you use and where you use it, you stand to earn rewards of one to six percent of the amount of each transaction.
Not sure if you can get approved for credit cards? Here’s what you need to know before applying.
Types of Cash Back Credit Cards
It’s worth noting that cash back cards fall into three varieties:
- Bonus category
With cards that fall into the bonus category, they pay a higher rate in “bonuses” that may change from time to time and one percent on everything else. As for flat-rate cash back credit cards, they pay the same rate no matter what you spend money on.
Finally, tiered cash back credit cards pay higher rates on certain types of purchases. These often include restaurant meals, groceries, or gas. They pay a lower, flat-rate on other types of purchases.
Since no single cash back card is right for everyone, that’s where the “Choose wisely” wisdom comes into play. In this case, choosing wisely mean making your decision based on how you spend money.
With this in mind, let’s take a look at the seven best cash back credit cards on the market. That way, you can make a well-informed decision about the right card for your lifestyle and spending habits.
1. Blue Cash Preferred Card from American Express
The Blue Cash Preferred Card includes a welcome bonus of $250 statement credit after you spend $1,000 in purchases within the first three months.
While the annual fee for the card proves high at $95, it comes with stellar cash back rewards, ranging from one to six percent. They include six percent cash back on select streaming subscriptions.
At the supermarket, you’ll enjoy up to six percent back as well up to $6,000 in purchases. After that, you’ll receive one percent back on all purchases at the grocery store.
You’ll also receive three percent back on public transportation, including parking, tolls, trains, buses, taxis, rideshare services, and more. You get three percent back at gas stations and one percent on all other purchases, although terms and limitations may apply.
Is the bulk of your credit card spending toward gas, commuting, streaming, and groceries? If so, then the Blue Cash Preferred Card from American Express might be right for you.
Learn more and apply for the Blue Cash Preferred Card.
2. Discover It Cash Back
The Discover It Cash Back Card by Discover comes with a potentially highly lucrative intro offer. The card will automatically match all the cash back you’ve earned at the end of the first year, and there’s no limit on the amount to be matched.
It has no annual fee. Yet, you’ll enjoy five percent cash back on everyday purchases up to $1,500 per quarter, from restaurants to grocery stores, select rideshare services to online shopping, and more. You’ll automatically earn one percent back on all other spending.
Because of this card’s unique intro bonus and $0 annual fee, it makes for a fantastic everyday card or a backup card. Find out more and apply for the Discover It now.
3. Chase Freedom Unlimited
There are many things to love about the Chase Freedom Unlimited cash back credit card. They include a $200 bonus when you spend $500 on purchases within the first three months, and a 15-month zero percent APR introductory period.
After this 15-month period, the card comes with a variable 16.49 to 25.24 percent APR.
You’ll enjoy a 1.5 percent cash back reward on all purchases. Besides cash back rewards, you’ll receive three months of complimentary service from DashPass, providing unlimited deliveries for a $0 delivery fee.
You’ll also receive a special five percent cash back on Lyft rides through March 2022.
If you’re looking for a simple-to-use flat-rate cash back card with a signup bonus and zero percent introductory APR, there’s no better card. Apply now for the Chase Freedom Unlimited.
4. Citi Double Cash Card
While there is no welcome bonus with this card, the card still wins high marks for its simplicity. There’s no annual fee, and you’ll receive two percent cash back on all purchases. One percent when you make the purchase and one percent when you pay it off.
If you’re looking for a cash back card that offers a smashing deal when it comes to balance transfers, look no further than the Citi Double Cash Card.
You’ll enjoy a zero percent APR on balance transfers for 18 months. After that, the variable APR kicks in at 13.99 to 23.99 percent, based on your credit score. Remember, though, that balance transfers do not earn cash back.
Expect to pay a balance transfer fee of $5 or three percent of the amount of each transfer, whichever is greater. Interest will be charged on your purchases. That is, unless you pay your entire balance (including balance transfers) by the due date each month.
As a result, you can double your money with this card while enjoying 18 months to pay off previous balance transfers. Find out more and apply for the Citi Double Cash Card.
5. Alliant Cash Back Visa Signature Credit Card
The Alliant Cash Back Visa Signature comes with more significant rewards the more you spend. While there’s no introductory bonus, you’ll receive 2.5 percent cash back up to $10,000 in qualifying purchases per billing cycle. Talk about rewards!
You’ll enjoy no annual fee during the first year, but expect to pay $99 per year after that. While some people might feel turned off by this annual fee, if you’re a big spender, you’ll make up for it.
After the first 12 months, when you spend more than $9,900 per year, this card will prove a better deal than a 1.5 percent card with no annual fee. What’s more, if you spend more than $19,800, it’s better than a no-fee two percent card.
Read up on the benefits of the Alliant Cash Back Visa and apply.
6. U.S. Bank Cash+ Visa Signature Card
With no annual fee and a zero percent APR introductory rate for 12 months, the U.S. Bank Cash+ Visa Signature Card is worth your attention.
After the first year, expect to pay anywhere between 13.99 and 23.99 variable APR. You’ll also pay 23.99 percent on cash advances.
The card comes with a generous $150 welcome bonus. To be eligible for this bonus, you must spend $500 in eligible purchases within the first three months.
You get five percent cash back on your first $2,000 in combined eligible net purchases on two categories of your choosing for up to $100 per quarter. That means a potential of $400 per year!
On everyday items like grocery stores and gas stations, you get two percent cash back and one percent on all other eligible net purchases. Fortunately, there’s no limit on total cash back earned.
From its $0 annual fee to its unique rewards system, the U.S. Bank Cash+ Visa Signature Card is fantastic for people who don’t mind actively managing their credit card accounts. Learn more about the card and apply online.
7. HSBC Cash Rewards Mastercard Credit Card
The HSBC Rewards Mastercard comes with an annual fee of $0 and an introductory APR of zero percent for the first year on purchases and balance transfers. That said, balance transfers must be posted within the first 60 days following account opening.
After that, the card is subject to a variable APR of 12.99 to 22.99 percent based on your credit score.
During the first year, you’ll receive three percent cash back on all purchases up to the first $10,000 in purchases. After that, you’ll receive an unlimited cash back reward of 1.5 percent on every $ 1 you spend on all new net purchases after the introductory period.
The card boasts no foreign transaction fees, and you’ll get ten percent off at onefinestay when you book one of the more than 10,000 high-end rental properties they offer in cities such as Paris, Los Angeles, London, New York, and more.
You’ll also enjoy MasterRental coverage, protecting against theft and physical damage to most rental vehicles and Mastercard Travel and Lifestyle Services, connecting you to luxury travel benefits, upgrades, and amenities at some of the most beloved destinations.
These added features make the HSBC Cash Rewards Mastercard a great card for those who love to travel. Learn more about credit cards with travel rewards.
Ready to begin the application process? Get started now.
The Takeaway: Best Cash Back Credit Cards
As you can see, there are a wide variety of cash back credit card options available. The trick is picking the best cash back credit card for your needs based on your spending habits and how you’d like to earn rewards.
This process starts with carefully considering the three types of cash back cards available. Will you get the most out of a flat-rate, bonus category, or tiered card?
Besides weighing how you’d like to use a card to spend money, you’ll want to keep in mind the fees associated with each card. If you pick a card with annual fees, for example, do the math to ensure you’re earning enough cash back to cover the cost.
After all, if you end up spending more in fees than you recoup in cash back, then a cash back card will be of little value to you.
That said, if you remain dedicated to paying off your bill each month to avoid costly interest and you keep fees in check, then you can use cash back credit cards to your financial success.
Just avoid the temptation to spend more money than you can cover each month. Yes, it’s nice to get cash back, but if you’re drowning in fees and interest, it won’t do you much good.
You’ll also want to keep in mind foreign transaction fees if you often travel and plan on using your cash back cards while abroad. Finally, remember some cards come with unique partnerships and discounts, which you’ll want to research thoroughly.
Where to Start?
Now that we’ve answered the question, “How does cash back work on credit cards?” and taken a look at the top seven cash back cards, you should have a better sense of the benefits associated with these credit cards.
Before you finalize a decision about which card you’d like to apply for, check out our blog post on credit cards 101. That way you can be sure you always choose wisely.